Transcripts For BLOOMBERG Bloomberg Surveillance 20170619

We have a lot of news to go through and we are looking at the 10 year treasury yield, of course, the markets, and the implications of a divided u. K. , brexit talks, and the macron win. First, lets quickly get onto your data. It is one thing that markets are looking at to see whether there are any tensions or not. Global equities are rising and that is filtering through to europe. We saw stocks in hong kong gaining, as Technology Stocks are beginning after their biggest weekly selloff last week. The yen is falling. Oil is down, and we see little bit of pressure on gold. More on that, but first the bloomberg first word news. Nejra theresa may is to chair an emergency meeting of the countrys Security Response team this morning, as police are investigating a potential terrorist attack after a van plowed into pedestrians outside i a north London Mosque. At least one person died and eight people were injured when a van was driven into Finsbury Park. A forest fire triggered by thunderstorms in the north of portugal killed more than 60 people. At least 30 people died in their vehicles, with more bodies found near cars on the side of the road and others in rural areas. More than 800 firefighters were still working yesterday to contain the blaze, which are rapid saturday. Which errupted saturday. The u. K. Government has decided timeve lawmakers more to deal with the brexit talks. The next parliamentary session, due to start this wednesday. Talks between britain and the European Union finally get underway today. In france, there was no public celebration from president macrons government last night as his party claimed a historic majority in the legislature. As a public on the move and the thees won 350 seats in national assembly, giving them the biggest majority in 15 years. But turnout was less than 43 , the lowest ever for a french election. The u. S. Navy has identified the seven sailors who died when their destroyer collided with a container ship off of japan on saturday. Seven crew members had been unaccounted for after the collision flooded with sea water. Divers recovered the bodies after the uss fitzgerald returned to a navy base in japan, aided by tugboats. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. This is bloomberg. Francine thank you. Voted to leave the European Union, brexit talks finally get underway in brussels. David davis sits down with the opposite chief eu negotiator, there is confusion over exactly what the British Government wants from his divorce. Now speaking exclusively to bloomberg, the central bank manager wade in on brexit. Bank manager weighed in on brexit. I think it is very unfortunate. The outcome cannot be something very good, neither for the u. K. , nor for the euro area. It seems that the impact is much more important a thing for the u. K. Francine lets get more on all of this with bloombergs john hoeven in brussels. What is each side hoping to get out of todays talks . This is the first day of talks. I think both sides now, almost one year after the referendum, they are happy to be sitting down finally. Finally, the talks are getting started. Unfortunately because of everything happening in london, the u. K. Position is still up in the air. They will have preliminary talks and put a good face on it, barnier and david davis will meet face to face for the first time and they are hoping to have a good start to these negotiations. Francine theresa may is facing a host of domestic problems. I will this play into the discussions . The main thinge is they will be uncertainty in terms of what the u. K. Position is. That is why today they will focus on the early stuff, the structure of the talks and what the eu is calling the separation issues. Is the bill and citizens rights. Today it will be more about Citizen Rights because the bill is very detailed and it will have to be done by the teams of negotiators in the next weeks and months. Francine thank you, our bureau chief in brussels. By loic fery. Ned also with us is Holger Schmieding. Thank you both for joining us. Loic, lets start with you. You lift in london you live in london. How will brexit play out . Are we looking at a soft brexit or hard brexit . What should Hedge Fund Managers look at . The results from the government on the recent election have put back the question of you know, the soft versus hard brexit discussion. We believe eventually, europe is driving the process and despite the words and it think, eventually, the u. K. Will have to either accept a softer nonbrexit, and go into a very soft and light separation agreement, which may actually make the bill much more acceptable for the u. K. , or go the hard route, in which case there will be a very longterm and i think Significant Impact on the british economy. We view that as a factor of uncertainty. As any such situation, that creates opportunities. Some assets are starting to see weaknesses. , in particular, on the paris regional and the u. K. Real estate. We follow very closely the developments over the next few days. Francine is there too much of a believe that this will lead to a soft brexit or no brexit . If you look across all political parties, even labour, they still wanted a brexit, just a brexit of a different kind. It probably will be a soft brexit in the end, but we will not know for quite a while and the risk is high it could be a hard brexit. It is not easy to see how the current British Government with a still badly divided conservative party could actually agree to make the decision for either the soft brexit, which will have a few people rather unhappy, or the hard brexit. It will probably need some significant political searching in the u. K. Next year to make the final decisions. Initially, we will probably get some evening news on citizens rights. Francine holger, what does that mean, a soft brexit . And does that come from the eu . Well, the eu has a menu of options, as the u. K. In the end has to choose. One would be the stages of norway, the minors, and the minors would pay a special part for the access to the eu financial market. Or, there is the hard brexit. The eu has various options and in the end, the uk. K. Has to choose. Francine have you see it playing out . For me, there is a red line. Said,hink it will, as we a soft stance on brexit from the u. K. Government will possibly make you know, the man in the streets in the u. K. Quite unhappy. I believe the Financial Sector and the rights of the Financial Sector are going to be a key point into the negotiation. You know citizens rights, i believe that will end up to be relatively soft. The u. K. Cannot afford to have a tough stance on citizens rights. Has a key carde, with the financial regulation, and with the Financial Services of the u. K. Francine holger, let me bring it over to our Bloomberg Brexit barometer. This is a custom index, which basically shows the impact of the separation process on the u. K. It is made up of indicators such as employment, inflation, growth, and uncertainty. It has gone down a touch. Will the markets even react to negotiations, or will they go into a summer lull and refocus on it in september . Of course, we will get some news in the coming weeks and months, but that news is more likely to be good than bad. The initial focus will be on the easy bit, an agenda, citizens rights. It will probably be late in the year that we really get to work on the tough issue, number one, the brexit, and afterwards, the future relationship. U. K. Willature is the eventually have a status in europe, in the major market, which is significantly worse than its current status and much of what the brexiteers said during the campaign will be exposed as what it was all the time, not true. Francine holger and luic will stay with us. Loic fery of chenavari and berenberg. Ieding of reporter theresa may will chair an emergency meeting of the emergency Response Team as they investigate a potential terrorist attack as a van plowed into pedestrians outside a north London Mosque. At least one person died and eight people were injured as the van was driven into Finsbury Park. Chinas home prices increased in fewer cities last month in the wake of cooling measures. Prices new home prices, gained in 66 of the cities. Prices fell in nine cities and were unchanged in five. London home sellers cut asking prices for the second time in three months. The slowdown might continue. That is according to rightmove, which is the prices dropped 2. 4 since june, leaving them down 1. 4 from a year earlier. Nationally, asking prices slipped 0. 4 . Boeing is to offer its first ne w jet at the Paris Air Show in almost four years. This counters airbus head start. The u. S. Playmaker is confident the model can carve out sales and stem customer defections to the a321 neo. Macrons president party has won 350 seats in the national assembly, a commanding majority of the 577 seats, the biggest in 15 years. But sundays turnout was below 43 , the lowest ever for the french. Now for more, we are joined by Bloomberg News reporter. Caroline, what does this mean for reforms in france . Of course, with this large majority, that should mean he will be able to push the reforms. How it is not as big as we may have expected just a week ago. The opposition from the rightwing Republican Party remains strong. They still have nearly 140 seats. Then, you get the National Party in the far left wing leader. They are still put out by the political landscape. Political leaders say tension was good news because it meant it was the beginning of a general trife of the french people. Francine thank you. Reporting from paris. Still with us, loic fery and Holger Schmieding. Loic, first of all, i know in the past you said a macron win would be good for the country because finally, it means there is an appetite for the french to move forward. There is a lot of talk about the fact that because there was a low voter turnout, he doesnt really have a white card, a carte blanche. Is there any truth in that . Just a few months ago, the election to the presidency with the challenger without party, as a president. Securing the largest majority ever in parliament, it has happened and i think it is a strong signal. It is a game changer for friends. I think it will be a game changer for europe. I dont read i dont think people were on strike. I think people were on the beach. People understood also that the conclusion of the election was that there were people tired with all parties. It is a big defeat for the socialist party. I think we should not read more than contrary to other countries, france has shown that change is possible. Key statement. A it will probably inflows the other countries in europe and i dont see that as a danger for populists. To the contrary, they will be constrictive actions in the coming weeks. Francine holger, president macrons program is mainly on liberalizing frances labor markets, but also integrating europe more. Will he achieve both . He probably will achieve both. The critical point is the labor market. Europe is interesting and important, but its not the key issue. Remember, the u. K. Had a labor market problem until Maggie Thatcher fixed it. Germany had a labor market problem until the agenda 2010 reforms. Labor market reforms make the crucial difference, as the former economics minister knows what the issues are. This program has been endorsed by the french voters. It was a tight election, the first round of the president ial election. There was a high turnout. His mandate is strong and his ideas are sound. He will likely deliver and it will be easier for germany to agree to a little more risk sharing if the french risk is seen as lower and everything is easier to do if the economic backdrop is good. Francine there is one train of thought that says the president macron does not succeed, what comes after him will be very extreme. That is one way of looking at it. I think, as you were saying, he is in power, he has the majority. No wonder, there will be people in the streets. I doubt he will wait long before rolling out the reforms and the labor market will be the first one to come. Its basically an essential point in freeing up france from some of the traditional blockage, but it will also be very key in the ability of france in regaining trust from germany and ensuring the fren chgerman link will act as a you know, what will make europe great again. Im very confident that macron will be elected and merkel in germany. Wen, in the later stage, start going into further integration for europe, like the budget, and potentially i see this coming in the second step of the mandate. Francine thank you, loic fery and Holger Schmieding. Both stay with us. What now for Monetary Policy in the euro area . An exclusive interview with the Ecb Governing Council member. This is bloomberg. Francine you are watching bloomberg surveillance. Im Francine Lacqua in london. We spoke exclusively to the Ecb Governing Council member. Take a listen. I think we have to see it as a riskk. In somee opportunities areas. See, fromfor lets the standpoint of macroeconomy, this is not a good day. Negotiations about something which is clearly a disintegration is sad. Its a sad day. You know, ive been witnessing the history of the European Union for decades nwow. It always has been a process of integration. Convergence. And now we will negotiate back to disintegration. Unfortunate. Very the outcome cannot be something very good for the u. K. , nor for the euro area. But id say that the impact is much more important for the u. K. Than the euro area. Within the euro area, we are showing strong, im pleased with that. I think to move forward with this, we should use the opportunity of this sad event to try to go further, to advance, and to deepen the european and monetary union. Francine still with us, loic fery of chenavari Investment Managers and Holger Schmieding of berenberg. You are just listening to the central bank governor. I also want to bring you over to my charge, which shows the ecbs financing operations in white, and the unemployment figure in blue. We think it shows mario draghi will become more of a hawk. Of course, he will become more of a hawk, but it will be a slow exit from the current policies. There simply is no way to inflate pressure. 0. 9 is where it was an average for the last four years. Though i think we are talking roughly two years from now, mid2019, that the European Central bank might be at the point of raising rates. Tapering comes first, as of january next year. Francine does the ecb come into mind at all when you look at your portfolios . Yes, of course, but we dont bet at all in any sharper form of removal of stimulus in european environment. We heard it directly from draghi recently. Was not giving any hints about the removal of stimulus. The ecb is quite happy to let it run hot this summer, and later in the year, in parts of europe, germany obviously, this chart shows. A figure of 9 unemployment across europe. If you look at the u. S. , i think the main indicator in the u. S. Being used is the job market. Growth to got of when it comes to unemployment in europe. Chenavariloic fery of tom investments and Holger Schmieding of berneberg. Investing in new, efficient planes in light of the Paris Air Show. This is bloomberg. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. So we need tablets installed. With the menu app ready to roll. In 12 weeks. Yeah. The world of fast food is being changed by faster networks. Data, applications, customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Fast connections everywhere. Thats how you outmaneuver. Francine you are watching bloomberg surveillance. Theresa may is to chair an emergency meeting of the Security Response team. Police are investigating a potential terrorist attack after a van plowed into pedestrians outside a mosque. At least one person died and eight were injured. Portugal has declared three days of National Mourning after a killed more than 60 people. At least 30 people died in their vehicles, with more bodies found in near cars and others in rural areas. More than 800 firefighters were working to contain the blaze yesterday. Britain is to observe one minute of silence as a marker of respect for those affected by the Grenfell Tower disaster. Theresa may has conceded the response to victims was not good enough. That comes as public criticism has mounted. There was no celebration from Emmanuel Macrons government last night. His republic on the move and its 350es one 350 seats won seats. Turnout of less than 43 was the lowest ever of a french election. s legal teamrump has said the president is not under investigation by robert mueller. That comes despite trump toss claims that he is the target of a witch hunt. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Francine still with us, loic. What is the number one concern you have when looking at portfolios . Is it currency swings, risk, something we dont see, or allocation to capital . Relativeis the valuation. On one hand, on the yield, the assets, that compressed significantly. Trillion to 18 trillion of the Central Bank Intervention and yield compression. We can see on the equity market, while the Economic Data is good, the main concern is the valuation. Is a key consideration today. Francine thank you. Prices are reducing the amp a test for airlines to increase or refresh their fleets. Hold for the future plane makers . Guy johnson is at the Paris Air Show. Guy the new french president , Emmanuel Macron, he is here. Finishedhe has just enjoying an air display. He will be touring the whole event. From what we have seen, mr. Riding highre, politically. Lets talk about what is happening in brazil, where politics is a dominant factor. Ceo,joined by the embraer paulo. Mr. Macron, on top of the world. Finding it tough in brazil. How does that impact your business . Paulo brazil is going through a moment now. Economic and in politics. It does not affect us much. We have 90 of our revenue outside brazil. For the image of brazil, the companies allocate are located in rozelle, it is not very good. Understands the process we are going through. It is important. If you look at the they are working well [indiscernible] i am sure we will have a good outcome soon. Flying. Have an a350 one of airbus new ones. The currency volatility is challenging. We have to be careful with that. We do some hedges. We export a lot. Whenever our currency is depreciated, it helps. Cost inone third of our currency. We have been coping well over the years. In has not been a big issue for us. Guy the rest of the industry is trading on more than that. Think that discount exists . Is a because of the politics . Something you have operationally that is going on . You are trading at a discount. Paulo a lot has to do with the brazilian situation. Brazil, there is a discount now. It is due to the brazilian issues, economic and political situations. Talk about what you are doing. You have a new aircraft. It goes to market next year. You will be rolling that out next year. How is it going . Is it on track . Paulo absolutely. We are happy. The e2 family is on track, 100 . We are absolutely on time. This has wrought this has brought a new family of , and air transporter for cargo. The legacy for 50. Guy the market is crowded. Paulo it is crowded. Big inventory of used aircrafts for sale. We have two way may be two years before we can see markets. You being held back on orders . Do you have the order numbers you hoped for . You look a little light in terms of what we expect. Paulo we are happy with the orders. We launched this in 2013. We havent launched entry of service. We have 275 firm orders. A potential for 600. It is pretty good for an aircraft that is not in service yet. Guy do you think the Trump Administration will let you sell jets to iran . Paulo probably. Gotten theirs, lets hope. Guy when do you see that happening . Paulo it is tough to say. I hope soon. The 350 islike coming into lands. Perfect timing. Paulo cesar silva, ceo of embraer. Job talkingod between landings. Guy has many good interviews from paris. Plus, dont miss another great interview, a conversation with. Asuries are on yielding our unyielding. What can bring yields higher . That is next. This is bloomberg. Francine you are watching bloomberg surveillance. Lets check on your markets. Decline in Global Equities last week. The selloff in tech spot tech stocks responsible for that. As for the stoxx 600, it was down 0. 5 last week. We are showing its biggest jump since april today. We are green almost all across the wheel. Industrial leading the gains, followed by financials and material stocks. Energy stocks performing well despite declines in the oil price. A look at the euro, we have touched 112 today. Macronmes after emmanuel one a majority won a majority in the election. Switching along the euro. You can see that line going above the zero. Currency itself, the price is starting to test its recent range. In the fx space, i am keeping an eye on sterling. The gilt yield, fairly steady. Up. E look at cable, we are this is where we are trading on cable. Finally, 10 year treasury yield, we are keeping an eye on. We are lower than december 2015, when it was at 2. 17 . Traders have bond been winning from the fed hiking cycle. Fact amazont the buying whole foods and wanting to cut prices could weigh on inflation. Kashkaris explanation of why the fed should have waited concern feeling the concern they should have waited. Francine it has been a busy year and a half. The u. S. 10 year yield remains below where it was when the fed raised the rates for the first time in nine years. We are tracking the various rate hikes. The first one and yellow was in 2015. Dent inhas not made a the bond market. The central bank tightened three times. See the treasury yield at 2. 15. We are still with loic. Loic most Economic Data in the of soft ansigns inning of the Economic Activity in the u. S. Pite that, we have had words from the president , saying the u. S. Is doing great. It seems the fed is committing to continuing the tapering. Data,e they use the job it is very strong. The inflation data remains soft. It seems to be softer. It would be useful to the u. S. That the package of measure, the Infrastructure Spending program be quickly rolled out. Believe rate hikes in the u. S. Combined with soft Economic Data will not do well. Me valuationstold are the key word, and where you decide to put your money. Talk to me about pockets of growth, valuations that look attractive. Clear, credit, where most of highyield trades below 2. 5 , it is difficult to find anything appealing and make huge bets. Where we see value left is around four directions. One, if you go longer, added duration to your credit exposure , look at the curve, fiveyear, 10 year on credit indices, there is potential for flattening. The second thing, financials. With the regulatory implementation, there is a lot of value in part of the capital structure. Issenior financials, it tight, but not very tight compared to where they were. The we see value in premium,y, liquidity basically is creating lots of value, especially in the finance lenders. Were talking about this four months ago. Have you found any targets . Has been a lot of deployment of capital and ireland, the u. K. , spain. We keep seeing the combination, very good. It yields remain quite high in those areas. Thank you for coming on. Purchase by biggest the biggest ecommerce company. We will analyze amazons takeover of whole foods. Francine you are watching bloomberg surveillance. Lets get to the Bloomberg Business flash. To chair aesa may is meeting of the Security Response team this morning as Police Investigate a potential terrorist attack after a van plowed into pedestrians outside a mosque. At least one person died and eight were injured after a vehicle was driven into a crowd of people in the early hours of this morning. Chinas home prices increased in fewer cities in the wake of measures of local authorities. Prices fell in nine cities and were unchanged in five. Boeing has said orders and deals involving more than 200 of its first new jets in almost four years are set to be announced at the air show. The u. S. Plane maker is confident they can carve out stills carveout sales. Francine it is the biggest purchase by the biggest ecommerce company. Of whole foodsse sent shares tumbling across the food sector. Charles, lets kick it off with you. How prepared are these grocers at amazon buying whole foods . Charles more than they were five years ago. Walmart and kroger has embraced ecommerce. We are in and amazon walks on water moment. No matter what the challenges are, it will be able to overcome them and gain market share quickly. Francine doing know what the model will look like . Are they coming in and running whole foods better or using it as a base for other things . Speculationit of because they have not mapped out their plans. There are ways they can implement it. There is amazon prime, different beennt things amazon has playing with. At the bookstores, there is a barcode Payment System they are using, you can see that being integrated. Whichave ghost stores in the stores cents, can map which you are buying as you do it. As you check out, it charges it to your app. Those are things you can look forward to seeing if they can cross over to a big grocery chain. Francine where you surprised by this . How do you see this unfolding . Foods is not a turnaround at the moment. It has had falling sales for seven quarters. Pressure. Is under one thing that will happen, amazon will be judged on ability to turn around the core of its business. Another significant point. Whole foods tos not operate in mainstream grocery. Amazon is still subscale in deands like coke and tie because whole foods does not operate in that area. Supposed toal is close and they second half of the year. There is speculation another deal offer would the made based on where the share prices were going. None have come in. Companies are mapping out their plans and the not too distant future. Francine charles, do you agree . Charles it will be interesting to see whether whole foods gets distracted. Activist investors may try to squeeze a couple of extra dollars out of this deal. 44 or 45,e hoping for 42. Francine thank you. Later today, we are back in paris. Guy johnson speaks to akbar al a. M. At 11 30 also later, dont miss a conversation with the facebook coo, sheryl sandberg. In the meantime, bloomberg surveillance continues in the next hour. Tom keene joins me. Brexit. You treasuries, today is the day where they meet in brussels and Start Talking about divorce day. This is bloomberg. Brags it begins. Talks open between the u. K. And. Brexit begins talks open between the u. K. And brussels. Emmanuel macrons party sweeps the election. The developing story in london, a van hits a group of muslim , killing one person. Theresa may calls it a potential terrorist attack. This is bloomberg surveillance. I am Francine Lacqua. Tom keene, in new york. With these types of events, we have to look at politics as theresa mays power is ebbing away. Almost an exhausted united kingdom. It does not seem to end. There is no other way to put it. Firstne lets get to word news. Taylor there has been another attack in london. Vantly after midnight, a plowed through a crowd of people. At least one person is dead and 10 others are injured. The vans driver said he wanted to kill muslims. Finally opened today, almost a year after the u. K. Voted to leave the European Union. Bid to strengthen her hand by calling an election backfired. Macrons, emmanuel Political Movement has won a large majority in parliament. Track torters are on win about 360 of the 577 seats in the national assembly. Voter turnout was the lowest ever for a french parliamentarian election. The u. S. Navy is promising an investigation of the collision that killed seven sailors a poor sailors aboard its destroyer. To keep had to struggle the ship afloat. Global news, 24 hours a day, powered by more than 27 hundred journalists and analysts in more than 120 countries, this is bloomberg. Live pictures of the brexit negotiations. You can see david davis and his counterpart of the eu. Hey are just leaving the stage they will brief the good about eight hours. Tom i think we will see more of this in the coming months, quarters, and years. Currencies,ds, commodities, dow futures up in the 70 range. Euro under 112. Oil is my feature today. Dow, 21,384 for those keeping score. Francine in europe, Technology Stocks are rebounding. I am keeping and i on gold, tom. To go to the bloomberg, there are number of ways to measure commodities. The bloomberg commodities index is a good map. Quite good. A china boom here, another boom here. This is inflation adjusted. Is an ugly curve down and a rollover again. Is a back story to 2017. This grind lower in commodities. Like that a lot. This is what i am looking at four rate hikes. The Federal Reserve has not made a dent in bond markets in the u. S. This is a picture from the 10 year yield. It is a simple chart. On socialsh it out radio for you social radio listeners out there. The 10 year yield stands below where it was in 2015. It is currently at 2. 15. The Global Income strategist. Markets see in treasury yields that they dont see in other Asset Classes . Reflects year yield two things. The first is, where the markets think Interest Rates will settle in the long run and the feds median dot. Pressyellen and her conference did not push that hard. That has left the market saying they have raised rates, they may not do another one. The second thing that comes into break even, the market is losing faith in the idea of 2 inflation average over 10 years. Inflation rates go just above 2 and dwindle away inflation rates go away. Bove 2 and dwindle i dont see what makes inflation come back just by hoping. Last week, the most publicized conferencehe press was transitory, what is holding cpi down. One month, it is mobile phone bills becoming cheaper, the next month, you could cut prices in the most expensive food store. We have price wars coming from technology in a whole host of industries. What is the correlation now . The market behavior here is out of sync. What does the correlation signal to you . Kit markets are trying to find themes. One of them is we are trying to get back into a correlated kerry seeking behavior. Carryseeking behavior. In asianea of green equity markets and flat commodity markets. Like ahings felt response to the u. S. , the fed move last week. Saying nothing is going on, rates will be low for a long time. We cannot hold that with a great length of time because we get nervous. The markets suggest the dollars fallen the dollar has fallen a little too far in the euro has risen too early. Of correlations look a bit confused. The underlying trend is we are still in this carrieseeking rryseeking trend. This chart up. G it is kiwi yen. It is a red zone, green zone chart. T jokes. Screaming ki i want to go long yen, short kiwi. What do you do . At this is the back end of bull market that probably has more to go because the fed is breathing life into this to keep it alive as long as possible. Kiwistill with this buy for a bit longer, but dont push your luck. Pay attention. What is your favorite bet. Sorry, tom. Go ahead. A monday,e on worldwide with Francine Lacqua and tom keene. Are you going to get kiwi yen . It is amazing what we can pull out of the bloomberg. It is amazing. Anything else you would watch for in terms of things we dont talk about every day . Kit the ones we are going to look for, where i would like to see encouragement for this euro this low yield environment, is people looking to buy the highest yielding currencies they can. Currency terms, things like , if itth african rand can balance back end shrug off another negative piece of political news i dont know how long you can do that. More gains for the mexican peso would impress me. Fun, look ato have the chart of the icelandic krone. That is one over valued currency. Liveine we are seeing pictures, this happens way too often. We have Police Cordons in london. This time, and sainsburys park. A man has died. 10 people have been injured. Into people inan front of a mosque. Is said toing receive 30 billion in and commitments for its new jet and almost four years. It was launched at the Paris Air Show today. Boeing is confident it can compete with the biggest narrowbody model. There are concerns the housing slump will continue. London home sellers cut their asking prices the second time in three months. That is your Bloomberg Business flash. Francine thank you, taylor. Briggs it talks begin to talks it talks brexit begin today. Joining us now, jones hayden. What do we know about what they will discuss . They went in to start the talks. Are putting a positive spin on these talks, saying we are going to get the best possible deal from both sides. We will see. At 6 00 tonight, we might have a different story after the talks. Francine what do we know about what the different sides are their agenda. Has the u. K. Position softened and that automatically means the eu position has softened as well . Jones we dont know what the u. K. Position is. The eu is looking across the channel and they are saying confusion and uncertainty. They are trying to figure it out. They will focus on the early what the eu would call separation issues. It will be an opening bid, opening talks on these things. To come toot be able any decisions today. Tom what is the timeline here . Sent us out for what we will see june, july, and into next year and into june and july of 2020. Jones i dont think it will last until 2020. Over the coming months, we hope to have them Reach Agreement on the brexit bell. Ree issues theyh want to have broad agreement on before they moved to the economy and the trade relationship the u. K. Wants to discuss for when they leave the eu. If we can get that by the end of the year, it will be considered great progress. With things going on in london, it is unsure if that will happen. Francine that is probably the understatement of the year. How do you see things going, kit . we know what they want. To some degree, the question is what extent they want to have their cake and eat it. There is desire to get control over immigration, over borders in general and to leave the eu, but to have a closer relationship with the Single Market as possible for the lowest cost possible. I hope the european side can help close the gap between what the u. K. Might wish for and what is feasible. Francine may be they soften on immigration control. This comes from yesterdays sunday times. Comes from boris johnson, saying we are going to deliver, not a hard or soft brexit, but an open brexit. Properly looking after the interests of the citizens who live and work here. Is this someone looking for the Prime Ministerial job . Whether he is looking for it or not, certainly someone looking to take a lead in how the debates will go. The discussions about Northern Ireland will be incredibly difficult. About the rights of eu members in the u k and the u. K. Members and the rest of in these to be done in a way that is fair and does not penalize people who have been living in the country a long time. Of, if youexercise want to have maximum free trade with europe without the four freedoms, all the difficulty comes from that. Tom within this is the flavor of brexit. I am confused. Maybe it is just me. What should global wall street Pay Attention to on brexit . Is it hard or soft . Brexit or no brexit . What is the parsing that matters . The debate is between the softer version of hard and the hard version of hard. Do you or do you not have unfettered access to the Single Market . Going to have trade barriers between the u. K. And the Single Market, then it is a hard brexit that will penalize u. K. Growth. If you are the soft or hard end of hard, it is still a brick wall. Have any we will not brick walls on this show because we will get back to kit and talk that he has been talking about. Ceo,eak with the qatar Akbar Al Baker at 11 30 in europe. Forward to the interview. This is bloomberg. We will not wait until new years eve to tell what will happen on the first of january, 2018. We have to look into this in the next month, i would say. Depending on the mandate, andour the first question remains of we convinced enough better Economic Growth . The ecb that is from executive board member, discussing the outlook for the ecbs asset purchase program. Kit, one of the charts we made show the ecb is not far from raising rates as labor market is an indication. You were charting the unemployment eurozone compared to the ecb refinancing announcement rate. A number of charts show you soon the ecb should start being hawkish. Does the ecb have the justification for extraordinary Monetary Policy . You would not see it in data except for the lack of Consumer Price inflation. The pressure on mario draghi, from the more hawkish elements, can only grow from herein. Om if you look at mr. Draghi, what is the power nexus of the ecb . Do smaller countries have any sway . Some help from mario draghi because it is an inclusive organization. He gets harder. Body part position is taken into account during the crisis, everybodys position is taken into account during the crisis, but it is harder to keep the german, the northern european, the bigger economiess needs the bigger economies needs. Is there something we should worry about . Are we underestimating political shadows . We have seen Political Risk melt away and we have had the reaction in the market. I find it difficult to imagine how we get back to an existence of a threat to the currency in an a mock ron nejra macron world. We have not had much discussion on where opinion polls are. To talkhave lots more about. In washington, we are focused on the Health Care Debate being driven forward in a secret and silent senate. Be the tone. Kevin cirilli will join us in the next hour. One of the most interesting people in the stock market. Bruce berkowitz will join us in the 6 00 hour. Let me go to a data check. Lift curve flattening. From london, new york, this is bloomberg. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. Tthats why at comcast,t be connected 24 7. Were always working to make our services more reliable. With technology that can update itself. And advanced Fiber Network infrastructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Tom lets get right to our first word news. London, police are pleading for, after what they describe as a potential terrorist attack outside a mosque. A driver drove into a crowd of pedestrians after midnight. One person died and 10 others were injured. Witnesses prevented the driver from escaping. In london, authorities now say be death toll and the Apartment Fire is likely to be at least 58. That total may increase. It is based on resident reports of who was in the building when the fire broke out. Theresa may admits the response to the fire was not good enough. Firefighters are trying to contain a massive forest fire that killed more than 60 people. Many died in their cars. The government has declared three days of National Mourning. There is a report that u. S. Has been negotiating with north korea for more than a year in an attempt to free american prisoners. U. S. Diplomats have been talking with top negotiators in north korea. Last week, one was released. He is suffering from severe brain injuries. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Tom thank you so much. As then interesting time distractions, robert mueller, james comey, the president. Been gettingave wonderful briefings. Kit juckes joins us. Bring up a chart here. I want to go back to fundamentals on a morning morning. On a monday morning. Economic growth is lousy. How much of the daily swirl do you wait to terrible Economic Growth . 3 plus gdp. Not bad. For those of you on radio, it is an ugly line. We are down to under 2 moving average on gdp. Everything we talk about in your world, is it just because of the lousy Economic Growth . Leslie the politics. By thee not being driven Economic Growth. They are being driven by the optics of what is coming out of the white house, Donald Trumps twitter feed. The economics would suggest we should have a more stable Political Climate than we do, which is worrying. Tom with that is the linkage over the weekend of economics and culture. Can you take the American Culture wars and bring that to europe, to the u. K. . Are the culture wars of america distinctive to the u. S. . Leslie great question. U. S. Ulture wars in the have a different cast. We talk a lot about in the United States about identity politics, political correctness. There is some of that here, but it does not look or sound the same. In the u. K. Right now, there is a significant focus as in they ofted states on the politics white, less welleducated, workingclass constituents. That exists in the United States. There is a commonality in terms of concern about immigration, migration, but some of what we see in the u. S. Is different because the expectation and the United States is that people will be integrated more effectively in society. About identity politics hyphenated americans. It is different. Francine give me a sense of what this means. The russiantions on pro. If we go back, when do we find out more about the probe . Does that hinder the administrations resolve to tackle inequality or push some of the things they have promised . Leslie the investigations are moving forward. There has been confusion about whether or not donald trump is now being directly investigated for obstruction of justice. He came out on twitter suggesting that he was. His lawyer is saying he is not. There is a distraction going on, but the key issue in all of these investigations is about russia and the cyberattacks. The link to this in the economy is crucial. What it is doing to the Trump Administration is it is proving to be a distraction. , again, congress is trying to move forward with health care reform. Week with must week. It got almost no attention because of the focus on these investigations. There is aue here is tremendous amount of energy in the white house into managing the politics surrounding these investigations. The key issue in the investigations is getting marginalized, the question of russia. It is proving a distraction for the legislative agenda. There has been no major piece of legislation he has been able to sign so far. Francine how do you look at these local development, probes, testimonies, and how does that friendly into the economy . Kit drift is the problem. You have a stalled leadership. What the chart shows is a collapse in productivity growth. If you layer on what we see in the lack of inflation, wage growth and what drives the inequality, we will not get a recovery in productivity growth. Not without policy. I dont believe it will happen by magic at this point. We will get policy while we have political drift. The politics of the inequality that drives this will get worse. I can say that about the u. S. And u. K. Tom to the point we have been talking about, is the president checked out . There is a substantial article today that he is not involved in iraq and afghanistan policy. I looked up the health care legislation. Is the president checking out on policy . Rumors there is a lot of circling this question, because we saw him last week delegate to the pentagon the question of of troopng the number levels in afghanistan with people suggesting this represents a major shift. Some, not all, agreeing with that. I dont think the president is checking out so much as he is delegating. It is his tendency not to get involved in the finer details. It comes back to the question of major points of distraction, but i think the president selectively checks in to certain part Foreign Policy items. To get back to his core issues, infrastructure, jobs, health care. He has good people. I think there is a sense in which a lot of people almost wish he might check out more. Of course when the president of the United States of america has to be responsible on the big questions, but it might be more productive if the National Security team could have more control over the daily agenda and not deal with the backandforth that is coming out of the twitter account. What is the call on u. S. Gdp . Is gdp helping in the markets . Sense is we are still growing the u. S. Economy marginally above 2 at the moment. We will do this year and next year. The difficulty, challenge, is if we do not get it recovery in productivity, you have an economy of less than 1 Labor Force Growth and running 1. 5 employment growth to get that 2 in a gdp growth. The clock is ticking. Unless you can get Structural Reforms coming through, it is going to be just the process of slowing down the u. S. Economy. They need a boost from fiscal policy. Tom very good. Kit juckes and Leslie Vinjamuri are with us. How about an important interview . A conversation with the secretary of commerce. He has been visible recently. Ross in the 8 00 hour. This is bloomberg. Francine we just had an update saying 79 people are now presumed dead after the fire at the apartment building. The pictures are still disturbing. A lot of people are trying to get to the bottom of exactly what happened. We saw a lot of images of destruction within the tower. Residents are receiving emergency payments from the government. ,his has political implications because the government had to say that in the days after the were notthe survivors dealt in a fast and appropriate way. Tom for a global audience, lets attached to this, and maybe leslie can help out, does this tragedy threaten the tenure of the Prime Minister . Francine it could. It could, in many ways. Not because it was hurt fault, but because she was seen as out of touch compared to jeremy corbyn. She did not go when cb survivors the day after this happen. Leslie vinjamuri we are withLeslie Vinjamuri and we are with Leslie Vinjamuri and kit juckes. It puts are under more pressure. Kit yes. If her problems are perceived to be overall making in terms of the campaign that she led an orchestrated and the disappointing election, and she needs to give the impression of being in control and strong. She has not. You go you, the challenge to her position as one of, does anybody want to challenge her position at this particular point with a weak government needing to get through these negotiations . I think it is more that. That is her strongest card. Who would want that job right now and what the chaos, to add more chaos to this . Francine lets focus on french politics. It was a good night for the french president. His republic on the move party in the national assembly, giving them the biggest majority in 15 years. Curling is in paris. There has been a lot of media saying he won by a large majority, but the turnout was low. Does he really have been mandate to reform france . This is the key issue. Previous record with 10 lower. You can imagine how many people did not vote, did not turn out. Fate ofms to be the new the antiestablishment, antielite. Not exactly 44 the extremes. Not showing up at the polling stations. The premise or said that means he will have an obligation to deliver. Next best promised a reform for the labor market and more integration of europe. Each one will he focus on . First, it is going to be the labor reform. , less than of june 10 days from now, the Prime Minister will present the main points of this able reform. Decrees. Ing to get he is hoping to implement these labor reforms by the end of the summer, maybe ratify with parliament by december. This is very controversial. There have been protests and demonstrations. Some of the content of these reforms are very controversial. He is hoping to allow companies to negotiate wages at the Company Level rather than the industry level. This is something we expect unions to be against. This is not going to be any the road for him. Tom we are coming up on the 60th anniversary of the fifth republic. Turnout was horrendous. It was in the 40s, which is unprecedented. With the linkage of the lack of turnout and the absolute macron revolution, is there an idea that there is a new six republic . Republic is something you want to install. Ofarly, there is this idea new energy politics. On is trying to do is involved, a young generation. We will have to see if these people actually deliver. Concerns that they may lack experience. One thatle, you have is elected at 24 years old. She just graduated. Them andave to train see if they can really form a Strong Majority for Emmanuel Macron. Francine thank you so much. Still with us in the studio, Leslie Vinjamuri and kit juckes. I dont know whether the interaction between Emmanuel Macron and President Trump helped the french president in winning a majority. What are the french people attracted to . Leslie the question on turnout. We dont know who has not turned out. When question is, whether it is the same element that we are worried about in the u. S. And across western europe that isnt turning out. Is it the white male, less welleducated that have concerns for the reforms that Emmanuel Macron might be undertaking that could harm their stability . Are those the people not turning out . That, it becomes vital some sort of provisions are made for bringing them into political life. In terms of how the u. S. Has affected the turnout in france, very difficult to know. I think trump has not been playing well in europe in terms of european politics. We saw that in germany. We have probably seen it in france. We have probably seen it in france. It will be vital in any reforms taken that that element of society is spoken to, listen to come integrated. If not, it will come back. What we have seen in the u. S. And u. K. Is that it will come back with a vengeance. Tom are there any checks and balances on the french president . Leslie i would not call the french democracy and dictatorship by any stretch. Majorityvery robust now. He will be about to do a lot, but it is a strong democracy. It has a strong civil society. The fact that turnout is lower than it has been is something he will be aware of and listen to if you an astute politician. If he is an astute politician. There are a number of reasons why people may not have turned out. It is difficult to decipher. It was a nice holiday weekend. It has been a long and intense campaign for many months. We do not know exactly what people have not turned out. People tend to protest by not turning out. It is one he will have to take into account. It is not a dictatorship. Francine thank you so much. Leslie vinjamuri with chatham house. We will get more thoughts from kit juckes. Marketsp, we have your and full brexit nauset analysis. We have the opportunity for you to ask specific questions. To tv and go to ask the guest a question. This is bloomberg. On bloomberg surveillance a monday morning. Lets talk about paris. Kit juckes of societe generale. Let me go to a chart i have shown you before. This is the nominal gdp normalized. The white minus the United States up up and away. Two theners the blue line are the two bouts of stagnation for france. Been what is the thing the macron revolution has to do . Has to do labor reform, structural reform to get Capital Spending going. You need to get lending to pick up, investment to pick up, dynamism to pick up. I do not think it is impossible to get an acceleration out of the french economy. I am optimistic that you have policies that will deliver. It is still tied into the overall european problem of inability to get in a growth, get debt levels under control. It feels as if we have been stagnant. I think they have a shot at doing it. It is about structural reform. You do not get productivity recovery after without policy to help it. Animal spirits in france. Do you need to focus on be atural reform or can it sense of new president , thenpresident majority . Kit there is an element of that. It is not just the new president. The German Economy is doing well. The spanish economy is doing better. You are surrounded in france by things picking up. There is an energy that you have a recovery coming. If you wanted to be something that delivers 2 growth at some point, then it needs policy reforms to help it. I think it will probably get it. Francine if the president does not deliver in one or two years, what comes after . Kit i think disappointment. But it is the same problem everywhere. If donald trump cannot deal with inequality, how does that solve the things dividing the United States . If Emmanuel Macron cannot get accomack Economic Growth, how does that same issue everywhere. We are tied into this growing inequality, week wage growth, and sluggish Economic Growth. That is causing political dissent. , thank you sos much. The next hour, we will get a briefing on distress. That will be the distress of the emerging markets. We have not done this in a while. This is a good time to catch up. Stay with us for another hour of bloomberg surveillance. Tom it is a silent secret senate. Senator mcconnell needs resolution on Trump Health Care to get the tax reform. This morning, republicans in the white house, are they on the same page . In london, a nation exhausted by death and injury. Once again, they go to a moment of silence. [no audio] [no audio] francine terrific pictures there from london. It has been a tough couple of weeks. For our radio listeners, we were seeing firefighters, the apartment building. This is the tower where fire swept through. Storyit it is a 24 apartment building. That happened on june 13. We have an update this morning. Concerned figure of debtor missing are now 79 people. This is incredibly distressing times for the families. It has implications on the wealth divide in that borough. We need to continue to look at the coverage of this, because it may have political implications. Or saturday it was amazing to see the cover of the telegraph on the web. How does it linked into the politics of the moment . There is no doubt the government has had a tough month. This could go back to haunt theresa may. We have had a response from the government saying for the survivors, the level of safety checks of the people that tied, but for the survivors, the support was not quick enough. We will have more from that. As more on the bloomberg first word news. We also had an attack overnight. There has been another attack in london shortly after bitnet. A band plowed through a crowd of people standing outside a mosque. At least one person is dead and 10 others injured. Iandard detains standers detained the vans driver. The two brussels, breast brexit talks finally start today. To strengthenbid her hand by calling an election backfired. The brexiton says talks will be done with profit and honor on both sides. Macrons, emmanuel Political Movement has won a large majority in public. They are on track to win about 360 of the 570 seats in the national assembly. Border turnout was the lowest ever for a french parliamentary election. The u. S. Navy is promising a full investigation of the collision that killed seven sailors. The uss fitzgerald is back in port after being struck by a container ship off japan. The crew had to struggle to keep the ship afloat. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Tom a quick data check. Not much going on before we get to our guests. Chart on commodities in a moment. The curve flattening. Down at the bottom, the bloomberg commodity index. This is what i am looking at. We are seeing buoyancy on the market securing europe. We are heading for the biggest gains in weeks. French equities powering ahead after the countrys new ident this is what i am looking at. Oil is sliding. It is gaining a touch now actually. Gold down. Years sincebeen 20 looking at the distress at markets. Acquiring the assets when noel house when no one else wants them. Our guest joins us. It has been too long since we have talked to you. So many other conversations have been about europe and trying to be opportunistic opportunistic about greece. Can you be opportunistic about china . Point,eems to be a focal but is it just a boring sequence in china, or is their opportunity . We have not seen any selloff in china that would give us the kind of opportunities. Tom it is not a distressed economy . It is not. China is the one thing you can look to where potentially you will change the market from a risk on market to a risk off market. In terms of the opportunities we look for, which are generally debt, china is a long way away. There are a lot of bears out there who think there is a problem in the credit market. It might influence the other markets to change the sentiment of the market to risk off. Tom lets move away and over to commodities. Chart is the inflationadjusted bloomberg commodity index. It is an ugly chart. If emerging markets are commodity markets, this has to help you get to distress, right . Years,or the past few this selloff in oil has put stress in a number of countries. At some level it has created an opportunity in venezuela. Prices combined with oil prices, you have this cash and carry trade that has been profitable. It is becoming more complicated now because of the political noise. Point, commodities have created a number of stories of distressed plays. Any country linked to commodities, the commodity has provided opportunities. On the flipside, in those where they are not a commodity producer, you have seen an opportunity for another kind of turnaround. Francine what exactly is determined the price of oil at the moment . It seems like a simple question, but it is complicated. Hans we have a number of analysts have opinions. Honest, we have found it difficult to a dissipate oil based on the fundamental analysis. We have been trying to look at it on a technical basis. Beappears to us it might finding more of a bottom support level. We do not want to try to make investments based on where we think oil is going. We are looking at it in terms of in a country or company of the stress level depending on certain oil prices. If oil is at 30, is it a good by now . Francine i want to go back to what you were saying about china. There is not enough demand coming from the country or is it Something Else you look at to show the stress signals . Us, there was a huge buildup in credit. There is potentially a debt problem structurally in the country. It is the balancing act that china has to do, maintain growth, but rein in credit a little bit. We do not look at china visavis oil as much as where it is in terms of maintaining growth. Constraining the potential problems they have with the leverage in the system. Tom we have a great distress chart i want to show you in a bit. I never really looked at visit venezuela debt. We will do that. It is a distressing chart. Coming up, a conversation with Bruce Berkowitz. York, this and new is bloomberg. Francine this is bloomberg surveillance when inlor boeing has a new jet a most four years, a stress version of the 737 was launched at the Paris Air Show today. We spoke with the companys ceo about the business climate. We are seeing progress. I would say on regulations and taking out regulations. We are seeing real, tangible progress. The great thing with President Trump in the administration, business has a seat at the table. Taylor one member of the European Central banks governing Council Calls the start of brexit talks a sad day. He spoke to bloomberg tv in brussels. Andt is a very unfortunate i would say the impact is much more important for the u. K. In the euro area. Decades, the European Union has about convergence. Now, it is negotiating about disintegration. That is your Bloomberg Business flash. Waiting. T now we are at some point we expect a conversation or statement by Prime Minister theresa may. She it has been an eventful 24 hours after this tragedy. She is in a cobra meeting now. Meeting we are told right now. We expect to hear from Prime Minister theresa may in a bit. We always expect to hear in washington from kevin. Did the president survived camp david . Kevin he did. The question continues. The political the 10th now including members of his legal team that in a backandforth about whether or not the president is under investigation. The president tweeting that he is under investigation for firing james comey, the now former fbi director. It seems like his legal team does not know whether he is or not. Tom i made a joke over the weekend. You wouldnt understand it, you are too young. He is going to need television this week maybe to discern what the Senate Health care process is. Do you have a clue what they are doing in the senate on trumpcare . Frank, ihave to be dont think they have a clue what they are doing in the senate. There are many senators were not inside the group of eight to 12 lawmakers were crafting the proposal. They have been keeping their cards close to best. There have been several republicans who have criticized this and said, where the hearings . It is going to frustrate a lot of folks. Tom i read all the articles this weekend. I still do not know, what is the why . Why is the senator from kentucky doing this . Kevin they want to be included. Even beyond senator paul, i think they want to be included. Note thee should make top ceos from Silicon Valley are going to be at the white house later this evening. Jared kushner put together a tech forum summit at about 5 00 p. M. Today at the white house. Francine if the under investigation, Jared Kushner . Kevin a we know is that the investigations are ongoing. He has said he will fully comply with anythign requested of him. There has been a scheduled hearing with Jared Kushner. What else is coming up this week . Do we have any more testimonies . Kevin the house is out of session today. Senate is in session. Top Silicon Valley ceos are at the white house. This is having Jared Kushner has worked hard on, but as of now you never know what could come in the trump white house. Tom we have one piece of good news. The congressman from louisiana is out of critical condition. Kevin yes, that is very good news. The House Majority whip seems to be improving. Tom thank you so much. Our chief washington correspondent. , how do you full local disarray into your work . Is it an opportunity . For a from like ours, it is. T has been difficult last year, at the beginning of the year, there was fear and loathing in the market. We were waiting for brexit vote. We did not have much sense of what is going on here. To some extent, there was a lot of paranoia. Markets were undervalued. This year, we had this overlay of not being able to assess the geoPolitical Risk. Making an investment in the middle east is tricky. We dont know which way it will go. We have been keeping our eye on iran, watching what is going on with saudi arabia and qatar. Alisa, latin america, africa. Obviously, latin america, africa. You probably went long leveraged on the mexican peso. Coming up, speaking of the Trump Administration, the secretary of commerce wilbur ross. Look for that it daybreak this morning at 8 00. Worldwide television and radio. This is bloomberg. Francine theresa may is due to speak after this attack in north london. She met with her cobra. Crowdplowed into a outside a mosque in north london. Wait, lets go to a morning must listen right now. Here is an equity investor. In conversation with our reporter, here is Bruce Berkowitz on fannie mae and freddie mac. When you think about it, there are issues of breach of contract. There are constitutional issues. How you create an agency that oversees fannie mae and freddie mac that does not answer to any branch of government. How did you lead an active director run the place for three years and then decide on a net worth sweep and the person was supposed to be appointed by the president and approved by the senate and it never happened . Other courts have not found in your favorite why should the Supreme Court seeking stability . We never argued the constitutional case yet. We got the process is wrong. We argued the process was wrong. How can there be a lot of hundreds of pages and it said the Government Agency can do whatever it wants whenever it wants . Should you have argued it as a constitutional case . Yes. It was so obvious. What your shareholders would love to know, how does this play out . When you file a complaint . I dont know what the mechanism or process is. It is a long process. From beginning to end, it could be a 10 year process. We are five years into the process. About five more years for resolution . Could be. Tom Bruce Berkowitz there on fannie mae and freddie mac. Hans humes is with us. Hans it has been done in our markets. The big headline cases. Elliott against argentina. We clearly will look to litigation to enforce. Debtetically, distressed is a story platelike equities. You have the enforcements. Sovereign enforcement is difficult, because the sovereign immunities act. Ultimately is what you do to try to enforce. Withine we will be back hans humes. We are seeing pictures of the podium outside number 10. Is the podium we have grown accustomed to in the last couple of months. Say is after u. K. Police they are treating an incident in which a van plowed into a crowd outside the northern London Mosque as a third terrorist attack on the map on the capital. We are expecting an update from the premise are. The Prime Minister. This is bloomberg. Tom good morning. Bloomberg surveillance. We need to begin a distressing first word news. Taylor starting in london, police are pleading for calm after what they describe as a potential terrorist attack. A driver drove into a crowd of pedestrians after midnight. One person died at the scene and 10 others injured. Witnesses prevented the driver from escaping. They say he shouted he wanted to kill muslims. Prime minister theresa may is expected to speak shortly. In london, Authorities Say the death toll of the Apartment Fire is at least 79 and the total may increase. Prime minister theresa may admit that the response to the fire was not good enough. Portugal,e of in firefighters are trying to contain a massive forest fire. Many died in cars while trying to flee. Three days of National Mourning have been declared. There have been reports that the u. S. Has been negotiating with north korea in an attempt to free american prisoners. U. S. Depo rate have been talking to top nuclear negotiators. North korea released went before americans being held. He is suffering from severe brain injury. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Tom thank you so much. Need a briefing on something i have been remiss about. The International Relations of syria. It was front and center in global politics, but need a brig i have been remiss about. Has just been off the radar. An important column today in the new york times. Bring it up here. This is the idea of where we are in syria. Recent four increase in noncombatant deaths is the United States is dropping more bombs, an increase from the obama presidency. There is no longer any public accountability. Over the weekend, we had the public accountability of a u. S. Jet shooting down a syringe it. Micah the initial adversary was going after isis. It has devolved into the mission of the forced protection, which is protected u. S. Forces operating in syria and their partners on the ground. We have adopted a new adversary to protect our forces. Tom i believe the path is 40 years with afghanistan. Is syria a new afghanistan or iraq . Micah syria will be like lebanon in the future. It will be agreements between the various parties, but it will be at war for a long time. The question is, what is the role of the United States to broker peace . It is not an endearing one. They do not want the United States their longterm. Were done with isis, the United States should transition out. Francine give me a clue as to what exactly the u. S. Will do and can do. We know Rex Tillerson has canceled plans to go to mexico, to the middle east. Who in the middle east will they listen to . Does china have a bigger role . Countries that have roles of the countries that have come patents. Combatants. Are a lot of outside actors that have their own interests. The United States cares about a safe heaven where foreign jihadists can operate. The russians have different interests. They want to make in control of their military ports and basis. The iranians have different interests. They want to maintain control of the assad regime. Ising somebody broker that not going to be the United States, because this is not an administration that has the diplomatic wherewithal to do that. It will likely have to be the u. N. All the wars and. Will end as well, but there that pathway to termination. Francine what will be relationship it between the u. S. And russia look like . The initial impulse of the Trump Administration was there was going to be a big bang agreement between russia and moscow im sorry, between moscow and washington. That becomes harder as the evidence of russian interference in the u. S. Election emerges. You have strategic competition both in Eastern Europe and the middle east. Tom your note on the president in afghanistan, the only word i could come up with was blistering. Humans no words about it. Nce no words about it. In afghanistan, what is our president need to be engaged versus having a secretary of defense . Micah the secretary of defense did not run for president. In the u. S. Constitution, the commander in chief sets the guidance to the armed forces. Afghanistan is the longest war for america. Tos large dealer pull put all significance, the president has awakened. The secretary of defense is not the president. Rooseveltlin delano was clearly a commanderinchief. Is there any equivalency to the trumps removal of these processes. Equivalent tos no contemporary history. He says i get my military total of 30. Doing whatthey are the white house should be doing, which is implement in all of the. Secretary mattis has said we need a whole government approach. He says we need a regional approach with other countries. That is not the secretary of defenses job. It should be led by the white house. Francine micah zenko, thank you so much. E will be back with hans humes coming up later today, a conversation with sheryl sandberg. This is bloomberg. Taylor this is bloomberg surveillance. In japan, the report is thing to shiva is the final stages of buying a Semi Conductor business. The buyers may pay about 18 billion for the chips unit. After amazon takes over whole foods, it plans to change the grocery chains pricing image. The buyers may payamazon expecte headcount and change inventory to lower prices. The goal is to make whole foods competitive with walmart and other retailers. That is your Bloomberg Business flash. Tom thank you so much. Hans humes is with us. One of the Great Investors in distress that. But go to the chart. The mother of all distressed nations, venezuela. The bond is down to 48. What is the measurement in distress . Is it . 48 on the dollar . Hans good question. When a sovereign asset the odds are you are going to recover money. The question with venezuela is, what happens . Do they default . If they do, what happens . Currently, venezuela is servicing its bonds. There have been a lot of headlines recently about hunger bonds, wall street is complicit is what is going on. What we are talking about our bonds that have already been issued. We are not providing new funding. Case, what you have an venezuela is to opportunity, maturities. If you think about it, you have up to a 15 point in in november. On this case, if they do default, what is the form of the rp falling restructuring the profiling restructuring . Even if they default, this may be a decent buy. Tom is venezuela linked to the processes you did with argentina , or is it so troubled from a political standpoint that it is a separate beast . Hans the answer is probably yes to both. Complicated restructuring. Potentially, you have the role, butay have a the answer is yes to both. Tom hans humes with us in new york. Francine david davis described it as the most complicated negotiation of all time. , the 00 a. M. This morning talks begin. There was an attack at Finsbury Park in london early this morning. It is kind of a mess. We dont know if it is a softer or harder brexit. You could design a worst situation to go into negotiations. She is not knowing herself what her negotiating position is going to be. He can already see the signs of them starting to tear each other apart again. As he said, this is happening on the back of a domestic situation that theresa may seems to be strugglingas he to lead. She came under heavy criticism for her reaction to the horrible fire. You have a Prime Minister who is in office who does not have a lot of power. Idea who comesy after theresa may if she steps down . Does it make a difference for negotiations . John it does make a difference. You can already see the jockeying for position. Boris johnson is always going to be a prominent name, but also david davis. Also see threat. Saying, if you allow a softer brexit approach to take hold, we will out you. From every single side, she is getting threats. At the top of this section, who knows where this will take the negotiations. Think thedo we position could be softened a bit , because she was adamant and strong on this, and now it is a fluid situation . Member, theve to use position going into this is itt no other country needs to be a tough deal so no other country dares to do with the u. K. Did and tries to leave that e. U. There is going to be no quarter past are given in these negotiations. They are going to drive us tough a bargain as they can. If you look at the people negotiating, it is a tough bunch on that e. U. Side. It is hard to see how they will show any charity to the u. K. Because of these domestic difficulties. Francine that you so much. Atari officials struck defiant tone. Qatar airways suffering from regional oversight blockade and the travel ban. From the ceo of Qatar Airways. With at the Paris Air Show guy johnson. Welcome to a firstclass cabin. Lets join the ceo of Qatar Airways. They you for inviting us on board. Nice cabin. Given what is going on with the airline, is it going to be tough to make this . I mentioned previously that the world is not just for countries. Have new destinations we are watching and we will expedite those launches and continue the growth pact. Growth path. We will find new markets and there are many markets that are money for Qatar Airways to fly into their airports. Guy in the nearterm, what effect does it have operationally . It is having a lot of disruptive influence on our networks, but we have successfully been mitigating this disruption. We see already there is an upward trend in the passengers that are starting to book. When there is a little bit of a people, they think it is a war zone. It is not, but it is just an intimidation game by our neighbors. Guy how do you redistribute the fleet . Any airplanes to it. , we are ready to take Prime Minister may this it. Morning, our country will to news of another terrorist attack. The second this month and every bit as sickening as those which have come before. It was an attack that, once again, targeted the ordinary and innocent going about their daily lives. This time, british muslims, as and prayed mosque together at the sacred time of year. Today, we come together as we have done before to condemn this act and to state once again that hatred and evil of this kind will never succeed. The Emergency Committee has just met. I can set out what we know about what happened and the steps we are taking to respond. Midnight, thepast metropolitan Police Received reports that a van had been driven into a crowd of people in Finsbury Park. Officers will be were in the immediate vicinity and responded within one minute. Police declared it a terrorist incident within eight minutes. One man was pronounced dead at the scene. Eight injured were taken to three separate hospitals while two were treated at the scene for minor injuries. Van, a white the man aged 48, was briefly detained by members of the public at the same, and then arrested by police. The early assessment by the police is that the attacker acted alone. Our thoughts and prayers this morning are with the family and friends of the man who died and those who were injured. On behalf of the people of london and the whole country, i want to think the police and Emergency Services once again for responding as they always do with great professionalism and courage. Extra Police Resources have already been deployed to reassure communities, and the police will continue to assess the security needs of mosques and provide Additional Resources needed, especially during this a particularlyre important time for the whole muslim community. Attack on muslims near their place of worship. Like all terrorism, in whatever form, it shares the same fundamental goal, it seeks to drive us apart and break the precious bonds of solidarity and citizenship we share in this country. E will not let this happen when a studio for the first time as Prime Minister last summer, i spoke about our precious belief in the union. Not just the bond between the four nations of the united kingdom, but the bonds between all of our citizens, everyone of us, whoever we are and whoever we are from. Is theheart of that bond belief in the fundamental freedoms and liberties that we all cherish, their freedom of speech, the freedom to live how we choose, and, yes, the freedom to practice religion in peace. This morning, we have seen a sickening attempt to destroy those freedoms and to break those bonds of citizenship that define our united kingdom. It is a reminder that terrorism, xrays them, and hatred extremism, and hatred take many forms. Our mission should be the same whoever is responsible. As i said here two weeks ago, there has been too much tolerance of extreme some in our country. That means extremism of any kind, including islamophobia. That is why this government will act to stamp out hateful ideology, both across society and of the internet, so it is denied a safe place to grow. It is why we will be reviewing our counterterrorism strategy and insuring police and Security Services have the powers they need. A is why we will establish new commission for capturing if she is in tempering extremism. Bit astremism is every insidious and destructive to our values and our way of life, and we will stop at nothing to defeated. Falls at aack difficult time in the life of this city, falling on from the attack on London Bridge two weeks ago i met and of course the unimaginable tragedy of gre nfell tower, in which i will chair another meeting later today. What we have seen throughout, whether in the heroism of the ordinary citizens who fought off the attackers that London Bridge, the unbreakable resolve of the residence in kensington, or the spirit of the community that apprehended this attacker, is that this is an extraordinary city of extraordinary people. It is home to a multitude of communities that together make london one of the greatest cities on earth. Vibrant,welcoming, compassionate, confident, and determined never to give into hate. These are the values that define this city. These are the values that define this country. These are the values that this government will uphold. These are the values that will prevail. Theresa may, the u. K. Premise are talking about this latest atrocity that is adding to challenges facing the premise are facing the Prime Minister. Exposedcks vulnerabilities in public security. The latest terror attack near a lighted mosque that has killed one and injured 10. Theresa may talking about the resolve of the country and the terrorism ideology not prevail. We interrupted the interview with the Qatar Airways ceo. Lets go back to guy johnson. Guy thank you very much. Listening to the british Prime Minister talking about the terrible events and london in london. Lets get back to the ceo. The Prime Minister was talking it is coming up shortly. Qatarhink the people of will prevail. Unfortunately, for some it will be families split up by this conflict where they were forced theirarate and go back to original countries, especially knowing the entire region has so much family mixes, people on the other side who were forced to part with loved ones, which will be unfortunate. You said you would take any aircraft anybody has got to sell. Are you not considering deferrals at the moment or cancellations . Not at all. You can check with boeing and airbus. We are not going to do it, because we are going to march on with our expansion. Guy if you had to, how many aircraft could you handle . We are not allowed to do for anything to differ anything. As a matter of fact, we are 77 thiso receive five 7 year. There is no politics involved in this. You would not favorite airbus over boeing. The president of the u. S. Has sided with the saudis. That would not impact you . At the end of the day, President Trump is the leader of the largest power in the world to date. Faith in this his matter will be important, and i am sure that at the end of the will prevail to these warring individuals who have conflicts to resolve their issues. Im sure he will look at what the justice is to be done, which is the billing which is the villain. Guy before that happens, how long . Any inkling this is going to end soon . Do you see this as a shortterm problem or are you planning for longterm . We are always prepared for the worst. The rest i will leave to the politicians. I cannot predict anything. Guy can i come back to the issue of how your running the business operationally and what effects it is happening . You have airspace you can operate in. How much is that increasing transit time . Who told you i have limited airspace . Is not thea comptroller of the entire airspace in our region. We have large airspace open to us through the iranian airspace. Openedntioned they have southern International Routes for Qatar Airways. It is a lie. They have not. When we apply to those roots, we are denied. We are business as usual. Over iranian all airspace, and at the same time we are mitigating the issue we have with additional fuel consumption. We are monitoring that carefully and making sure that all our Business Issues are properly documented in order for us to go to the International Tribunal to reflect the strings that have been put on flying additional hours. Guy your excellency, thank you very much for your time and patience. Of Qatar Airways. This incident with qatar, net profit up 22 for 2017. Really good numbers. Back to you. Francine guy johnson with Akbar Al Baker. European stocks are to be a second day, partly boosted by french equities. Won is after the president hand to drive economic reform. Won hand to drive economic reform. The pound hedging higher. Euro study as brexit talks begin. We are expecting to be updated the two main people negotiating today in around six hours. This is bloomberg. The most complicated negotiation of all time, brexit negotiations kick off. And now he has to deliver. And who is next . The industry scrambles for the next big deal with the essence the test s p for a big time. John for his features hitting close to a record high. Stocks seeing the biggest jump we have seen since april. The rolling crude